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What Can a NO-Deal Brexit Mean to the UK?

Image source: https://www.foodmanufacture.co.uk/Article/2018/12/19/Brexit-fears-build-on-no-deal-warnings

From the recent media coverage, it has been seen that Theresa May is trying to gain support for her withdrawal deal with the EU ahead of a vote in Parliament next week. Although the deal has been approved by other 27 Member States of the EU, it has been suggested that May might not be able to get her deal passed in Parliament next week.[1] What will happen if May’s deal is in fact defeated? According to Article 50 TEU and British law, Brexit will happen on 29 March 2019. If parliament rejects May’s deal and no Brexit deal is agreed, a no-deal Brexit will take place.


Before delving into no-deal Brexit, it might be interesting to see what is in May’s deal and why it is so unpopular. May’s deal includes two matters which will be voted on 1) the EU withdrawal agreement which set out what will happen when the UK leaves the EU on 29 March;[2] and 2) the accompanying political declaration which explains what the UK’s future relationship will be like with the EU once transition period ended.[3] The political declaration is not legally binding but defends the core principles of the EU (single markets and customs union), and the UK (sovereignty).[4] Meanwhile, it says futures ties with the EU should remain as close as possible, and this could have disturbed hardcore Brexiteers such as David Davis. In addition, the deal failed to address the Northern Irish backstop, which added more uncertainty to the future condition of the borderline between the UK and Ireland (see my previous blog on Irish border), as this could mean Northern Ireland would continue to follow the same rules as the Republic of Ireland, and there would be no difference to its previous status as part of EU customs union and single market as other Member States. This might explain why Conservative MPs have joined forces with Labour to defeat May’s plan in a Commons Brexit vote.[5]


What does a No-Deal Brexit mean? It essentially means that the UK would leave the EU immediately on 29 March 2019 without any agreements about the future relationship between the UK and the EU. From the literal meaning, a No-Deal Brexit does not seem to be an extremely unacceptable option so it might be interesting to look at some of the real-life effects of it and how it would affect people’s everyday life. As discussed in my previous article, if the UK and the EU ultimately failed to reach an agreement on the future relationship, trade rules would be regulated by the WTO (World Trade Organization) agreement. In that case, there would be no free movement rights and obligation to apply EU law. Thus, it would be very likely for the UK to introduce a tariff scheme for EU suppliers if they still wish to sell their goods in the UK and vice versa. These EU imported goods might also be subject to quarantine and customs checks in order to enter the UK market, but so far, the government does not seem to have any idea how complex and time-consuming building a proper IT system for it will take. Consequently, farming might become one of the vulnerable sectors in a no-deal scenario. For the British meat and food exporters, they could face WTO tariffs as well as a wait up to six months before they are certified as approved exporters.[6] For the British consumers, unfortunately, they might need to pay more for foods and grocery, if a no-deal Brexit actually takes place. Acknowledging that approximately 70% of food imports come from the EU, it should not be surprising to see a price rise since retailers would face an average tariff increase of up to 22% in the event of a no-deal scenario, particularly in dairy, meat, vegetables and fruit.[7] The negative effects of the increased tariffs would eventually cause a fall in pound and lead to a food price inflation which might arise to 4.5% - the highest in a decade.[8]


What is even worse? Neither the government nor the people seem to be prepared to face the challenges that may come after a no-deal Brexit. Taken medicines such as insulin as an example, a no-deal Brexit could potentially lead to significant problems with the supply of this vital medicine. Sir Michael Rawlins, the chair of the Medicines and Healthcare products Regulatory Agency (MHRA), has once told a journalist that the UK did not produce any insulin and every drop of it is imported.[9] Even though this is not 100% accurate, as there is indeed ONE company – Wockhardt UK – that produces animal-based insulin at its site in Wrexham, their products could only satisfy the needs of less than half of one per cent of the 421,000 people who rely on insulin in the UK.[10] Insulin used by the people in this country is mainly imported from the EU countries so that it should not be difficult to see why the supply of insulin may be affected in the event of a no-deal Brexit, especially transporting it is complicated as its storage has to be temperature-controlled.[11] Also, NHS would be adversely affected and experience some chaos. The Department of Health and Social Care‘s 33-page guidance outlines key areas that need to be focused on, one of which is the inability to access medicines.[12] The health and social care secretary has recently chartered a plane to fly in important medical supplies that have a short shelf life, such as radioisotopes used in cancer care and gene therapies. Pharmaceutical companies have also been ordered to build up stocks for the supply of six weeks. NHS fears the impact of any form of Brexit, but particularly a no-deal one, not mentioning their vital supply of staff from the EU.[13]


The ‘good’ news is that the new Grieve amendment has been passed by MPs, meaning that if May loses next week, the Commons will still have a chance to vote on alternative policies – everything from a ‘managed no-deal’ to a further referendum (which can be confusing, complex and catastrophic).[14] It is understandable why May’s deal is unpopular. On the face of it, it is about Brexit, but deep down, it is talking about how to keep close ties with the EU, which can be disappointing to not only the hardcore Brexiteers, but other British nationals who have voted for leave. However, there is not much time left for the UK, and based on obvious reasons, a no-deal Brexit might not be viable for many practical reasons. More importantly, the potential negative effects of a no-deal Brexit are unknown and unpredictable. Maybe, at this point, taking May’s deal is not the worst option, at least seems better than a no-deal Brexit which nobody has prepared for.


Yuxin Li

Brexit Section Editor

11 January 2019

 

[1] Britain and the EU, ‘Can a no-deal Brexit be stopped?’, The Economist 9 January 2019, accessed 9 January 2019 < https://www.economist.com/britain/2019/01/09/can-a-no-deal-brexit-be-stopped?cid1=cust/ddnew/email/n/n/2019019n/owned/n/n/ddnew/n/n/n/nUK/Daily_Dispatch/email&etear=dailydispatch&utm_source=newsletter&utm_medium=email&utm_campaign=Daily_Dispatch&utm_term=2019019>


[2] Newsround, ‘Brexit: Parliament debates ahead of a vote on Prime Minister Theresa May’s Plan’, BBC 9 January, accessed 9 January 2019 < https://www.bbc.co.uk/newsround/45589251>


[3] ibid


[4] A Sandford, ‘what is in Theresa May’s Brexit deal and why it is so unpopular?’, euronews 19 December 2018, accessed 9 January 2019 < https://www.euronews.com/2018/12/07/what-is-in-theresa-may-s-brexit-deal-and-why-is-it-so-unpopular>


[5] Politics, ‘Brexit: Second Commons defeat for Theresa May in 24 hours’, BBC 9 January 2019, accessed 9 January 2019 <https://www.bbc.co.uk/news/uk-politics-46805269>


[6] D Campbell, L O’Carrol, J Jolly, K Makortoff, A Vaughan & Z Wood, ‘Food prices to finance: what a no-deal Brexit could mean for Britain’, The Guardian 30 December 2018, accessed 9 January 2019 < https://www.theguardian.com/politics/2018/dec/30/food-prices-to-finance-what-a-no-deal-brexit-could-mean-for-britain>


[7] Ibid


[8] ibid


[9] N Praities, ‘Millions of patients could be affected by ‘no-deal’ Brexit Medicines shortages, says MHRA chief’, The Pharmaceutical Journal 27 July 2018, accessed 9 January 2019 <https://www.pharmaceutical-journal.com/news-and-analysis/news/millions-of-patients-could-be-affected-by-no-deal-brexit-medicines-shortages-says-mhra-chief/20205240.article?firstPass=false>


[10] G Lee, ‘Are insulin supplies really at risk from a no-deal Brexit?’, Channel 4 20 July 2018, accessed 9 January 2019 < https://www.channel4.com/news/factcheck/factcheck-are-insulin-supplies-really-at-risk-from-a-no-deal-brexit>


[11] n.9


[12] n.6


[13] ibid


[14] n.5



Disclaimer: The views expressed are that of the individual author. All rights are reserved to the original authors of the materials consulted, which are identified in the footnotes above.

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